Here’s an infrastructure-based way to play the electric vehicle takeover in the next decade

Published Sun, Jun 27 20216:40 AM EDT

Electric vehicle sales are rising, which will spur a buildout of charging infrastructure across the U.S. – along with an opportunity for investors, according to Jefferies. Analysts led by David Kelley expect the U.S. charging station market to grow more than 30% annually each year to 2030, noting that "to avoid the highway to hell, EV infrastructure build-out is key to the electrified future." Indeed, the firm said that at present in the U.S. there are 84,000 Level 2 charging stations and 18,000 DC Fast Charging stations, which they envision rising to one million by 2030 and more than 2.4 million by 2035. To that effect, Jefferies initiated coverage on ChargePoint with a buy rating, saying that the company's position as a leader in the space should result in further gains ahead. "We expect CHPT leverages scale and integrated hardware, software, & services features to drive +57% sales CAGR [compound annual growth rate]," the firm wrote in a note to clients. "We expect charging build out will become a heightened government focus point globally given increasing demand for clean energy and electrification to combat climate change," the firm said. President Joe Biden's initial infrastructure bill included $174 billion for spending around electric vehicles, also the most recent proposal calls for just $15 billion in spending. Still, the initiative signals the administration's position on encouraging greater adoption. ChargePoint is a vertically integrated pure-play EV charging name, selling charging hardware to customers, which it then turns into recurring revenue through a cloud-based software support system. The company provides charges across commercial, fleet and the residential segments, with Facebook, Whole Foods and FedEx among its customers. In September the company, which was founded in 2007, announced its plan to go public through a reverse merger with special purpose acquisition company Switchback Energy Acquisition Corporation. The deal closed on Feb. 26. "Europe and fleet expansion provide significant greenfield growth opportunities outside core commercial volumes...as CHPT aims to leverage core hardware, software & services integration, as well as tech expertise," Kelley said. He also pointed to the company's asset-light model — it doesn't own the charging infrastructure — as fueling upside into the future. Jefferies has a $40 target on the stock, which is 26% above where shares closed on Friday. The stock has gained 3% since the merger was completed at the end of February. - CNBC's Michael Bloom contributed reporting.

ChargePoint electric vehicle stations.

Source: Charge Point

Electric vehicle sales are rising, which will spur a buildout of charging infrastructure across the U.S. – along with an opportunity for investors, according to Jefferies.